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WELCOME BACK: MARKETS TANKING (AGAIN) - European markets tanked hard Monday on new fears of bank failures, sovereign debt contagion and a possible Euro crack-up. Tuesday could be a blood-bath on Wall Street if data come in weak (more below) and as everyone gets back to their trading desks after the dismal Big Zero jobs report on Friday (which should not have come as a surprise to loyal M.M. readers). September is usually the cruelest month for the market and this one looks no different. Wasteland: http://bit.ly/pC2FW6

TREASURY YIELDS CRATER - From the Self Evident blog (widely read around Wall Street): “As I write, the 10-year yield on U.S. Treasuries is at 1.91%. I believe that is an all-time record low. It’s a good thing nothing deflationary has ever happened in U.S. history or this might be a scary statistic. (No worries. This is probably just the smart money fleeing Europe while there still is a ‘Europe’).” http://bit.ly/oirYh2

EXCLUSIVE: JOHNSON RIPS GOP ON CFPB - From prepared remarks to be delivered this afternoon by Senate Banking Committee Chairman Tim Johnson (D-S.D.) at a hearing on the nomination of Richard Cordray to be the first director of the CFPB: “The purpose of today’s hearing should be to consider whether Mr. Cordray is qualified for [the] job. ... Instead, a vocal minority is playing games with the process and holding Mr. Cordray’s nomination hostage. ...

“This political gamesmanship is preventing Americans from receiving the consumer protections they deserve and putting community banks and credit unions at a competitive disadvantage to nonbank financial companies ... The misleading claim of no CFPB accountability - drummed up by special interests and put forth by a vocal minority - should be exposed for what it is: an attempt to destroy the Bureau’s ability to do its job of protecting American consumers.”

CORDRAY: LAWSUITS NOT THE FOCUS - From Cordray’s prepared remarks: “I know from my own experience that lawsuits can be a very slow, wasteful, and needlessly acrimonious way to resolve a problem. The supervisory tool, in particular, offers the prospect of resolving compliance issues more quickly and effectively without resorting to litigation. ... Enforcement, of course, will still have an important role.”

BANKS CONSIDER TOTAL WAR - M.M. hears that instead of contemplating settlements of the FHFA mortgage-backed securities lawsuits, big banks and their attorneys are more likely to pursue what insiders describe as an all out war strategy in which they go after Fannie Mae and Freddie Mac (and by default their Democratic supporters) in a scorched earth strategy to show the GSE’s took an active role in creating the very securities they are now suing the banks over.

HOT THIS MONTH: SEC IG’S MADOFF REPORT - M.M. hears the SEC Inspector General’s report (due out later this month) detailing how the agency handled ties between its then-general counsel David Becker and convicted Ponzi schemer Bernard Madoff will be a scorching hot read and not very comfortable for SEC Chair Mary Schapiro.

ROMNEY HAS A 59-POINT JOBS PLAN - Former Massachusetts Governor Mitt Romney in a USAToday op-ed: “Obama has had his turn at fixing the American economy. Millions of unemployed Americans can judge by their own experiences what he has done and failed to do ... I will introduce a plan consisting of 59 specific proposals — including 10 concrete actions I will take on my first day in office — to turn around America's economy. ...Marginal income tax rates and tax rates on savings and investment must be kept low. Further, taxes on interest, dividends and capital gains for middle-income taxpayers should be eliminated.

“Our corporate tax rate is among the world's highest. ... Ultimately, I will press for a total overhaul of our overly complex and inefficient system of taxation. ... I will pare back regulation, including eliminating ‘ObamaCare.’ I will direct every government agency to limit annual increases in regulatory costs to zero. The impact of any proposed new regulation must be offset by removing another regulation of equivalent cost.” http://usat.ly/pXVQAi

OBAMA FIRES UP LABOR - President Obama’s Labor Day speech to a fired up crowd in Detroit got strong marks even though there was little news in it (just a slightly stronger emphasis on infrastructure). BusinessInsider’s Zeke Miller: “[T]he oratorical prowess that propelled him to the White House was on stirring display” ... POLITICO’s Matt Negrin: “Obama’s Labor Day speech ... wasn’t an official part of his reelection campaign, but that didn’t stop a fiery crowd of supporters from chanting ‘four more years’ throughout it. ...

HUFFPO banner: “Fired up for labor. Obama delivers impassioned defense of labor movement.” ... WSJ’s Naftali Bendavid: “[A]n animated Labor Day talk before an enthusiastic crowd ... It was feisty and framed in part as a challenge to Republicans to join his jobs push and, as the president put it, to prove they care as much about the middle class as they say they do.” ... WP’s David Nakamura: “Obama used Detroit and the revitalized auto industry to try to remind people of White House successes there and to energize his base.” Obama full text: http://1.usa.gov/qOxKhI

GOOD TUESDAY MORNING - Welcome back to the Big Show. Summer’s gone, the global economy is in crisis, Congress is back, the presidential campaign is about to ignite, the NFL season kicks off Thursday and the Yankees are back on top. Button up your chin straps. It’s all smash mouth from here on out.

WHAT NEW DEVILRY AWAITS? - Market Place muse Heidi Moore from a piece looking at the new week in global insanity: “If you want to know what the world economy is going to look like this fall, you could consult the work of the wisecracking author Dorothy Parker. She used to ask: ‘What fresh hell is this?’” http://bit.ly/opEpXt

DRIVING THE DAY - Markets will react in part to the ISM service industry reading out at 10:00 a.m. The figure, which gauges activity in the bulk of the U.S. economy, is expected to dip to 51 from 52.7. Anything much worse (especially a dip below 50) would be rough news for the market ... Romney lays out his jobs plan in Las Vegas at 12:30 p.m. ... Business Roundtable hosts a forum at the Newseum this afternoon (1:30 p.m. to 5:00 p.m.) on the deficit reduction supercommittee. Panelists include Douglas Holtz-Eakin and former House Budget Committee Chair Jim Nussle. BRT details: http://bit.ly/oaPzy6

DRIVING THE WEEK - NBC/POLITICO GOP debate on Wednesday marks Texas Gov. Rick Perry’s official debut on stage with his rivals as the stakes grow for Romney and the rest of the field to start cutting into Perry’s early poll lead. ... Thursday features Obama’s high-stakes jobs speech before a joint session of Congress (just before NFL kick-off) ... Before Obama takes the stage on Thursday, Fed Chair Ben Bernanke speaks at the Economic Club of Minnesota at 1:30 p.m. ET on the state of the economy with markets likely to hang once again on anything he says about possible further steps to boost growth ...

Treasury on Thursday hosts a counter-terrorist financing symposium including remarks from Secretary Geithner and Assistant to the President for Homeland Security and Counterterrorism John O. Brennan, and other current and former senior U.S. counterterrorism officials, national security experts and private sector leaders.

U.S. OPEN LATE NIGHT - In case you went to bed before the final match began close to midnight, you did not miss much. Roger Federer destroyed Juan Monaco 6-1, 6-2, 6-0, barely breaking a sweat on a windy night.

WEATHER BLAST: KATIA HITS CAT 4; WON’T HIT LAND - Bloomberg: “Hurricane Katia ‘strengthened considerably’ to a category 4, the second-highest level, as it churned over the Atlantic, the National Hurricane Center said. Katia had maximum sustained winds of 135 miles ... The system was about 450 miles south of Bermuda traveling northwest at 10 mph. The hurricane is forecast to turn north in two to three days, setting it on a path between the east coast of Bermuda and the east coast of the U.S., creating life-threatening surf and rip current conditions, the center said.” http://bloom.bg/mWbhMV

G7 THIS WEEK: NEW STIMULUS? - Reuters’ Jan Strupczewski: “Group of Seven financial leaders, worried about risks to global growth, are likely to agree this week to keep monetary policy accommodative, slow fiscal consolidation in countries where that is possible and implement structural reforms, a G7 source said. Finance ministers and central bank governors of the United States, Canada, Japan, Germany, France, Italy and Britain (G7) meet on Friday in ... Marseilles to discuss what action to take to prop up the slowing global economy.” http://bit.ly/r8fXSe

From Glaser’s prepared testimony: “In less than eight years, TFI has had a dramatic impact on our national security. Through the use of targeted financial measures, the development of innovative mechanisms for collecting financial intelligence and sustained engagement with key jurisdictions, we have systematically undermined terrorist financial networks across the globe, with notable success against core Al-Qa’ida, our greatest threat.” Full testimony: http://politi.co/qhUnGE Hearing prep memo: http://politi.co/qxEF0R

MASSAD PROFILED - Treasury’s Tim Massad—who runs the TARP program and is among the most unassuming power players you will ever meet— is profiled in the current Washingtonian and described as Washington’s “most powerful money manager.” It’s not online but you can read it here: http://politi.co/o8zXGp

END OF THE EURO? - ZeroHedge links to a UBS report which concludes: “Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change. ... Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade.” http://bit.ly/mYztiL

TALKER: GLOBAL REGULATORS MAY EASE UP - FT’s Brooke Masters and Megan Murphy: “Global bank regulators are preparing to ease new rules that would require banks to hold more liquid assets to withstand a funding crunch in a crisis. The move follows complaints from banks that the new Basel III standards ... would force them to sharply curtail lending to consumers and businesses. ... A new report by JPMorgan estimates that 28 European banks faced a total liquidity shortfall of €493bn ($695bn) at the end of 2010 under the ratio’s current framework. Only seven of the 28 banks tested met the enhanced standards, with the leading French banks - BNP Paribas, Société Générale and Crédit Agricole - among the least prepared. http://on.ft.com/qlrrnN

UNITED STATES OF EUROPE? - NYT’s Louise Story and Matthew Saltmarsh on pg. A1: “As leaders in Europe try to contain a deepening financial crisis, they are also increasingly talking about making fundamental changes to the way their 17-nation economic union works. The idea is to create a central financial authority — with powers in areas like taxation, bond issuance and budget approval — that could eventually turn the euro zone into something resembling a United States of Europe. ... The idea is being promoted by some global financial officials, who worry about the risks that continued uncertainty in Europe poses to the global economy.” http://nyti.ms/odWP0m

U.S. CHAMBER LAYS OUT JOBS PLAN - The U.S. Chamber of Commerce sent an open letter to Obama and Congress on Monday “unveiling its detailed jobs plan and calling on leaders to take immediate action to create jobs for 25 million Americans ... The plan includes: expanding trade and global commerce; producing more American energy; speeding up infrastructure projects; welcoming tourists and business visitors; streamlining permits and provide regulatory certainty and relief; and passing job-creating tax incentives.” New Chamber Web page has the plan as well as print ads that start running today: http://bit.ly/qDLJwt

EUROPE FEAR REIGNITES - FT’s Richard Milne in the front-page splash: “German benchmark borrowing costs fell below 2 per cent to all-time lows while Italy’s shot up as worries about the eurozone debt crisis and the fragility of banks once more intensified. European lenders bore the brunt of a broad-based sell-off across equity markets while the cost of insuring bank and government debt hit record highs ... German 10-year Bund yields fell 16 basis points to 1.85 per cent, their lowest ever. ...

“Angela Merkel, the German chancellor, told parliamentary colleagues that the situation in Greece and Italy was ‘extremely fragile’ ... That has fed into concern about the banking sector, which was stoked on Monday by a speech from Josef Ackermann. The chief executive of Deutsche Bank underlined how close some European banks were to collapse while ruling out the forcible recapitalisation proposed by the [IMF]” http://on.ft.com/qKuQtF

DARKENING MOOD - WSJ’s Brian Blackstone and Laura Stevens on pg. A1: “International financial markets tumbled as a darkening global economic outlook and deepening fissures in Europe over its debt crisis fueled fears the world economy could slip into a period of prolonged malaise. ... Monday's rout is a sign investors increasingly worry that a mix of slow economic growth and high public debt will tip the global economy back into a recession. ...

“Though both the U.S. and Europe emerged from recession about two years ago, a recent string of economic data suggests the recovery is fading on both sides of the Atlantic. ... Until recently, the global economy appeared on track for a solid, if unspectacular, recovery, led by emerging markets such as China, India and Brazil. ... Now emerging markets, though still expanding, aren't growing fast enough to lift the entire global economy.” http://on.wsj.com/ntxhdC

FEELS LIKE 2008 (AGAIN) - NYT’s Liz Alderman and James Kanter: “As the stock and bond markets seem eerily similar to the dark days of 2008, Jean-Claude Trichet and Mario Draghi, the current and incoming chiefs of the European Central Bank, pointedly urged European leaders to move quickly to ensure that the euro zone’s debt crisis does not become seriously worse. Europe needs to ‘make a quantum step up in economic and political integration,’ Mr. Draghi said as the bond yields of Greece, Italy and other countries with weak finances jumped ... He and Mr. Trichet addressed a forum in Paris that focused on the world three years after the collapse of Lehman Brothers.” http://nyti.ms/pfYB3q

DECISION TIME FOR GOP ELITE - POLITICO’s Alexander Burns and Jonathan Martin: “[P]arty leaders say the dynamics of the race could be locked in place by the end of October. That’s because the Republican establishment ... is about to start picking sides. After countless attempts to lure new options into their party’s presidential field, GOP fundraisers and power brokers are coming to terms with what looks like an increasingly binary choice between Mitt Romney and Rick Perry. ...

“Only Romney and Perry appear to be in contention for the insider backing that could help them shape the hard contours of the race by mid-autumn. ... The emerging duel between the two Republicans presents an agonizing choice for donors who want to support the better general election candidate but also want to be on board with the winner of the party’s 2012 primary.” http://bit.ly/r6izYC

WHY ROMNEY MAY NOT WIN - DailyBeast’s Peter Beinart: “According to the old rules of American politics, Mitt Romney should win the ... nomination. He came in second last time. He’s got lots of money. ... But he’s unlikely to win because we live in an age of presidential hatred. These days, to win your party’s nomination you must be the polar opposite of the president your party despises. Any significant resemblance between yourself and him and you’re done.” http://bit.ly/pNRIsy

ROMNEY GOES MODERATE - WSJ’s Jonathan Weisman and Naftali Bendavid: “Romney, seeking to regain his footing after losing his front-runner position, sought to stake out some moderate ground at a Labor Day candidates' forum [in S.C.] pushing back on some of the sharply conservative positions his competitors embraced. ... Mr. Romney stood out among a slate of candidates who embraced abolishing the Education Department, privatizing Social Security and ending the Federal Reserve's role in addressing unemployment. Pressed on whether he would flout the Supreme Court on abortion, the former Massachusetts governor said he wouldn't precipitate a constitutional crisis. And he went out of his way to say a regulatory response to the 2008 financial crisis was warranted, though he said ... Obama had gone too far.” http://on.wsj.com/oQ52aw

PERRY SMACKS ROMNEY ON JOBS - POLITICO’s Emily Schultheis: “Rick Perry cut short a trip to South Carolina on Monday to head home to deal with wildfires in his state but got in a shot at Mitt Romney before he left. ‘There is no one who’s gonna be sitting on that stage [at the debate in California] who has the record of job creation I have,’ Perry said at a packed town hall ... ;There’s one in particular who’s created jobs all around the world. While he was the governor of Massachusetts he didn’t create many jobs.’ The mention of Romney was Perry’s only direct shot at any of his Republican opponents at the event.” http://bit.ly/q1E5sB

ALSO FOR YOUR RADAR -

STATES MAKE SETTLEMENT OFFER - FT’s Shahien Nasiripour on pg. 1: “Big US banks in talks with state prosecutors to settle claims of improper mortgage practices have been offered a deal that is proposed to limit part of their legal liability in return for a multibillion dollar payment. The talks aim to settle allegations that banks including Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally Financial seized the homes of delinquent borrowers and broke state laws by employing so-called ‘robosigners’ ... According to five people with direct knowledge of the discussions, state prosecutors have proposed settlement language in the ‘robosigning’ case that also might release the companies from legal liability for wrongful securitisation practices. Some state officials have expressed concern that they have offered the banks far too broad a release from liability.” http://on.ft.com/p1mNDu

USPS FACES DEFAULT - WP’s Ed O’Keefe: “The U.S. Postal Service could lose up to $10 billion and have little more than a week’s worth of money left in the bank when its fiscal year ends Sept. 30, the nation’s top postmaster will tell Congress Tuesday. Postal officials are hoping the latest numbers will finally compel lawmakers to grant them new legal authority to alter delivery schedules, close post offices and lay off hundreds of thousands ... Competing legislative proposals from Democrats and Republicans in the House and Senate are pending, and Postmaster General Patrick R. Donahoe wants lawmakers to vote by month’s end, when the Postal Service will have to pay more than $7 billion in statutory labor and health-care costs that Donahoe says are chiefly responsible for its financial collapse.” http://wapo.st/qQGIkt